To calculate public saving, taxes, private saving, national saving, and investment, we need to consider the given values and the relationships between these economic variables. Let’s break it down step by step.
Given:
- Consumption (C) = 12.5
- Government Spending (G) = 4
- Taxes (T) = 3
- Income (Y) = 20
Step 1: Calculate Private Saving
Private saving is the amount of income that households have left after paying taxes and consumption. It can be calculated using the formula:
Private Saving = Y – T – C
Substituting the given values:
Private Saving = 20 – 3 – 12.5 = 4.5
Step 2: Calculate Public Saving
Public saving is the amount of tax revenue that the government has left after paying for its spending. It can be calculated using the formula:
Public Saving = T – G
Substituting the given values:
Public Saving = 3 – 4 = -1
Step 3: Calculate National Saving
National saving is the sum of private saving and public saving. It can be calculated using the formula:
National Saving = Private Saving + Public Saving
Substituting the calculated values:
National Saving = 4.5 + (-1) = 3.5
Step 4: Calculate Investment
In a closed economy, national saving equals investment. Therefore, investment can be calculated as:
Investment = National Saving
Substituting the calculated value:
Investment = 3.5
Summary:
- Private Saving = 4.5
- Public Saving = -1
- National Saving = 3.5
- Investment = 3.5
These calculations help us understand the flow of income and savings in an economy, and how they relate to investment and government spending.